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Wednesday, March 01, 2017

Capitalism's housing crisis

Capitalism
has left homes empty and people homeless, argues Leilani Farha, UN
special rapporteur for housing. There
are hundreds of trillions of dollars invested in residential property
worldwide, the paper estimates. The effect has been to accentuate
housing need: displacing poor residents (often through forced
eviction), driving up wealth inequality, and creating social dead
zones in the once-beating hearts of cities.

Leilani
Farha, will highlight the impact of society’s tendency to view
houses as financial commodities rather than homes for people, in her
report to the UN this week.
Ina hard-hitting
report[pdf],
she details the shift in recent years that has seen massive amounts
of global capital invested in housing as a commodity, particularly as
security for financial instruments that are traded on global markets
and as a means of accumulating wealth. As a result, she says, homes
are often left empty – even in areas where housing is scarce.

“Farha
uses the phrase “residential alienation” to describe this
process:

“In
Vancouver, people were telling me they live in neighbourhoods where
this house is empty because it’s been bought as an asset, this is
occupied, this one’s empty and this one’s empty. So you have no
neighbours, you have schools closing down because there aren’t
enough students to go to the school; so your children, if you live in
one of these vacated neighbourhoods, are not going to school in your
community any more. Shops are closing, restaurants are
closing,” Farha has told
the Guardian, in an exclusive interview.

The
report warns about a rise in “dehumanised housing”: housing built
as a high-yield commodity rather than for social use. A significant
portion of investor-owned homes are simply left empty. In Melbourne,
Australia, for example, 82,000 (or one fifth) of investor-owned units
are unoccupied. In prime locations for wealthy foreign investors,
such as the affluent boroughs of Chelsea and Kensington in the city
of London, the number of vacant units increased by 40% between 2013
and 2014. In such markets, the value of housing is no longer based on
its social use. Properties are equally valuable regardless of whether
they are vacant or occupied, so there is no pressure to ensure
properties are lived in. They are built with the intention of lying
empty and accumulating value, while at the same time, homelessness
remains a persistent problem.

The
average income of local residents or kinds of housing they would like
to inhabit is of little concern to financial investors, who cater to
the desires of speculative markets. These are likely to replace
affordable housing that is needed locally with luxury housing that
sits vacant because that is how best to turn a profit quickly. For
instance, Kensington & Chelsea is a hotspot for building luxury
housing, and yet the borough also has the fourth highest number of
households in temporary accommodation in UK, as well as the highest
rate of out-of-borough
placements(meaning
when people become homeless, they are moved to different boroughs
entirely).

Escalating
house prices have become key factors in the increase in wealth
inequality. Those who own property in prime urban locations have
become richer, while lower-income households become poorer. Surveys
of ultra-high net-worth individuals show that over 50% have increased
the proportion of their investments allocated to housing. The most
common reasons are in order to sell at a later date and provide a
safe return on investment, thus protecting wealth. The “economics
of inequality” may be explained in large part by the inequalities
of wealth generated by housing investments.

The
impact of private investment has also contributed to spatial
segregation and inequality within cities, Farha points out. In South
Africa, private investment in cities has sustained many of the
discriminatory patterns of the apartheid area, with wealthier,
predominantly white households occupying areas close to the centre
and poorer black South Africans living on the peripheries. That
“spatial mismatch”, relegating poor black households to areas
where employment opportunities are scarce, has entrenched poverty and
cemented inequality. Similar patterns of racial displacement from
urban centres and segregation can be found in large cities in the US.

This
also creates gender segregation: in Australia, analysis has shown
that average-income single female workers can afford to live in only
one suburb of Melbourne, and cannot afford to live anywhere in
Sydney.

Governments
have agreed to dramatically reduce or eliminate affordable housing
programmes, privatise social housing and sell off real estate assets
to private equity funds. The report argues that many governments are
too deferential to unregulated markets and have failed to protect the
right to adequate housing. Tax subsidies for home-ownership, tax
breaks for investors, and bailouts for financial institutions have
subsidised and encouraged the excessive financialisation of housing.

“I
look up at these developments and I see gleaming towers of glass and
steel, I see architects in their machismo building the best,
funkiest, coolest buildings. I believe in good design, but I see this
and I see huge, huge sums of money, for me staggering sums of money,
being poured into these places not as homes but as investment,”
says Farha. “How
does it make me feel? One, too much inequality. People talk about
income inequality: where it manifests so clearly is housing
inequality ... I see a society that doesn’t care about the most
vulnerable. It’s mind-boggling to me that people could spend so
much money and know that at the same time none of that money is
assisting the poorest people in terms of housing. It’s a pretty
bleak picture.” She continues, to explain that things cannot
carry on as they are when not just the very poor, but key workers
like teachers, firefighters and police officers can’t afford to
live in the city. “Are we going to have cities devoid of low-income
people? I can’t figure out what the breaking point is. But it is
not sustainable ... I don’t know what the future holds but it is
looking pretty bleak to me.”